Tesla Motors' Global Expansion Strategy: A Case Study

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BUSINESS ORGANISATIONS AND
ENVIRONMENTS IN A GLOBAL CONTEXT
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Table of Contents
Executive summary.........................................................................................................................3
Introduction......................................................................................................................................4
Background Information on Tesla...................................................................................................5
Background Information on the Business Environment in New Zealand.......................................6
Analysis of the Business Scenario...................................................................................................7
Conclusion.......................................................................................................................................8
References........................................................................................................................................9
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Executive summary
In this assessment, there is defined the circumstances of business organization and its
environment globally that have many issues regarding their expansion in different countries.
Here is described the multinational retailer that is Tesla and it requires to overcome the issues
that are attached to the identification of the external factors and strategic management.
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Introduction
In any organization, environment, and culture affect the internal and functional environment of
the company. There is scope of creating a proactive and immense environment of a company that
has an essential role in supporting and creating dynamics of the organization’s environment.
Tesla motors are also expanding their business in different countries California and New
Zealand. In New Zealand, it has been very challenging for Tesla to expand the business as there
were some issues such as intelligence adaption, full automation, and customer experience, etc.
for overcoming these issues in New Zealand, there should be applied the policies of FDI (foreign
direct investment) that are executed for selling the products with the cutting and state of art
technology including local sourcing policy. It will be helpful for Tesla to expand the
organization worldwide.
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Background Information on Tesla
Tesla Motors is an automobile manufacturer company of America and also known as energy
Storage Company that was recognized in 2003. Also it is co-founded by the Marc Tarpenning,
Elon Musk, JB Straubel, Martin Eberhard and Ian Wright. This firm produces electric cars and
their mechanism and tools of battery charging. Headquarter of Tesla is situated at Palo Alto,
California in US. It has larger base of customers globally and the present CEO of Tesla is Elon
Musk. It has around 3000 employees in the company and produces the Tesla Roadster that is
known as the first electric sports car. It various new products to get launched and the second
product of Tesla can be an electric luxury sedan. It has also crossed global sales of 150,000 units
(Akakpo et al., 2019).
Figure 1: Tesla
Sources: (financialexpress, 2019)
Organization structure-
Tesla Motors also develops, designs, manufactures and sells various models of electric vehicle
powerful components, electric vehicles and stationary energy storage systems over the world.
This company is not just an automaker but also a designing and technology company with a
concentration on energy innovation. Tesla’s electric battery, automobile, and solar panel sales
revenue are expanding along with the competition with the large associations like automobile
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manufacturers such as- Honda motor company, General Motors Company, Toyota motor
company, Nissan motor company, Volkswagen and BMW, etc. There is variety in the product
types of the company and target markets.
Organization size-
In the initial years, the co-founders Marc Tarpenning and Martin Eberhard helped in financing
the company. After that Musk Led that was the chairman helped in funding and also had specific
operational roles. Tesla has the purpose of commercializing the electric vehicles along with the
sports car launching and changing them into the production of mainstream vehicles like sedans
that are achievable for mass markets (Chen & Perez, 2018).
Organization culture-
There is requirement of decreasing the workforce by 10% because of the factors of employee
burnout. The Tesla motors have customer base globally as well as base of shareholders that is
known as proper leadership style assisted by Musk. There are applied the various framework of
leadership for the adoption of business cultures like Lewin’s leadership styles for getting
different methods for democratic leaders, autocratic leaders, and laissez-faire. Path-goal theory is
also applied for a particular leadership style that concentrates on the accomplishment of the task
(Schaltegger, Lüdeke-Freund & Hansen, 2016).
Current international operations-
Recently Tesla is targeting on the three key transnational customer segments along with the
offering of standardized product. First targeted market is related to high-end sports car that is
known as niche market and the second is luxurious vehicle sedan and SUV market that are a
competitive segment with the sales potential highly and it includes the Model S and Model Y.
they are also working on enhancing the core competencies in the vehicle engineering, powertrain
engineering, energy storage, and innovative manufacturing, etc. For international operations,
there is applied FDI in Tesla as Musk wanted to expand the company in different countries.
However due to norms of FDI, it couldn’t be accomplished. But sometimes these FDI norms are
helpful in solving the issues like intelligence adaption, customer experience, and full automation
by applying the norms in favor of business associations. In this, GDP (gross domestic product) is
also implemented for health representation of country economy with the no surety of data. GDP
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is necessary for tracking the economy’s health and denotes the goods and product’s value over a
particular time period. It is used for determining the growth of the economy or recession’s
experience. It leads to high spending through the customers on services and products (Shet,
2019).
Here are described the environment of business organization Tesla Motor that includes size,
culture, structure, and current international operation, etc. these are helpful to understand the
business organization in terms of different things. Tesla has an automated industry sector and has
established its different position in the country. It has created a revenue stream for the ecosystem
relevant to some other businesses. Additionally, the digital transformation of Tesla has
manipulated new technologies of development for overhauling, advancing and rejuvenating
procedures and operational activities. Tesla is efficiently interacting with the existing and
potential customers for developing a consumer experience through using website development
and social media intensively.
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Background Information on the Business Environment in New Zealand
The organization Tesla Motors wants to expand its business in different countries so the firm
decided to expand its business in New Zealand. They have entered New Zealand officially. They
have also launched their first product that is eight model S vehicles by a media occasion at Ports
of Auckland. There is also provided test drive to the interested customers with their engineer
(Kester, Sovacool & Heida, 2019).
Organization’s structure-
The store in New Zealand will have three vehicles that are build up with the two models S and
model Y. they also launched the retail model that refers direct to consumer and offers the future
owners for customizing the vehicle design and the electric vehicle’s benefits with no
compromise.
Product services-
There will be launched the Tesla home energy product for the customers that consists of solar
panels and power wall. Their servicing model is also different that is made up of a zero-profit
model for making sure the costs understanding and remote diagnosis over the air by the in-built
connection of vehicles. Tesla is also expanding the supercharger network in Omarama and
Queenstown. Soon there will be the completion of Tesla’s purpose of accelerating the transition
of world to maintainable energy (Lebron & Brannon, 2018).
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Figure 2: Tesla Motors Model
Sources: (Kane, 2016)
For a better understanding of the business environment in New Zealand, Tesla can apply the
approaches that are country-specific such as PESTLE analysis for analyzing the macro-
environment. It will help in understanding the market environment’s diversity due to the variety
of target market and product of the company. Solutions of some specific problem like above
mentioned such as- customer experience, intelligence adaption, and full automation, etc. also can
be solved by strategic management applied by this approach (Hartman et al., 2017). So it is
essential to analyze and addressing the external features from the business environment that are
as mentioned-
Political factor - It includes governmental influences on businesses and their
macro-environment. It also affects the industries and
businesses. For example- trade or norms can bound the
revenues of the firm and industry performance.
- There are some essential external factors for Tesla and energy
and automated solutions like-
1) New agreements for global trade
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2) Electric automobile’s governmental incentives
3) Political constancy in the main markets
4) This firm has the strength to increase financial performance
by government incentives.
- It will be relevant to the decreased carbon emission of
operations of the company and products.
- It enhances competitive strategy consisting of market
penetration (Fjeldstad & Snow, 2018).
Economical factor - It involves trade levels, market growth, currencies and other
aspects that affect the automation business. For example- the
growth rate of solar energy market decides the chances of
growth.
- These below-mentioned factors should be addressed for the
automation market:
1) Reducing renewable energy costs
2) Reducing the costs of battery
3) Issue of economic stability
- These factors change to electric automobile product’s
affordability of the firm.
- It also improves solutions for renewable energy for becoming
more famous (Soviar et al., 2019).
Social factor - It includes customers, employees, and investors that affect
social trends and conditions. Manager of the firm makes sure
the strategies for maximizing the external factor’s business
advantages.
- Socio-culture external aspects included:
1) Enhancing the predilection of renewable energy.
2) Increased approval of low-carbon lifestyles.
3) Betterment of developing market’s wealth distribution.
- These factors are helpful in improving the demand of the
market for the electric vehicles of the firm.
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Technological factor - It determines the impact of technologies on the macro or remote
environment of the company.
- Energy and automation solution’s advancement relied on
current technologies. For instance- the technology of material
engineering decides the cost-efficiency and effectiveness of the
firm’s batteries (Kompalla et al., 2017).
- These are the following technological external aspects in the
automation business:
1) Enhancing business automation
2) Technological change’s high rate
3) Enhancing online mobile system’s popularity
Legal factor - This factor is helpful in shaping business development and
managerial decisions. For examples- marketing mix such as-
people, pricing, product and place of Tesla are applied within
the legal aspects.
- Corporate strategies should involve the below mentioned legal
external aspects like-
1) Regulations for energy consumption
2) Expansion of international patent protection
3) Dealership sales regulations in New Zealand.
Environmental factor - It includes the effect of the ecological conditions for instance- it
determines the material availability applied in the production
procedure of the firm (Ralph & Hancock, 2018).
- Here are some ecological external aspects as mentioned-
1) Expansion of environmental programs
2) Changes in climate
3) Rising standards on the waste disposal
- It enhances the chances of promoting the electric vehicles relied
on environmental program’s expansion, climate change and
batteries, etc.
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Analysis of the Business Scenario
Tesla had a promising start in the field of vehicles that run on electricity rather than gasoline. It
also took over the charge of sustainable energy ecosystem and solar city along with the
production of electric cars. Through this, they have a good reputation in the market and for
maintaining this reputation there should be applied effective strategic concepts and competitive
analysis as mentioned-
Vision-
The vision of Tesla is to establish as most persuasive car company of the 21st century through
bringing the world’s evolution to the electric vehicles. It denotes the Tesla’s goal to concentrate
on the cleaner and green environment through using sustainable and renewable techniques in the
area of the transportation industry (Teece, Peteraf & Leih, 2016).
Mission statement-
Tesla wants to accelerate the perspective of world to sustainable energy by producing electric
vehicles. It refers to the use of renewable sources for a sustainable future. It has the aim of
presenting the sources effectively and for intending to accelerate or speed up the transition
procedure.
Competitor analysis-
An electric vehicle’s sales, the global trend has seen increment around 63% worldwide. This
below-mentioned figure represents the sales trend and difference in sales increment of the three
years of global electric car sales. Tesla also focusing on providing and vending new sustainable
technologies. The SWOT analysis can be helpful in assessing the company’s future and
competitive analysis by identification of strength, weaknesses, opportunities, and threats that are
faced by the firm.
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